Poorer Clientele Result in Lower Income and Hospitals in Washington Face Crisis

The impending crisis faced by two hospitals in Washington DC, USA, Greater Southeast Community Hospital and Prince George's Hospital Center seem to symbolize the malaise faced by hospitals across the country serving poorer sections.

Thursday, a judge will consider a lawsuit filed by the nonprofit company that runs Prince George's Hospital Center in Cheverly and two health campuses in Laurel and Bowie. All are owned by the county, and if Dimensions Healthcare System does not get a bailout, it says it will have no cash left by early September. Its board of directors is threatening to declare bankruptcy or close the hospitals.

Greater Southeast is in better shape, because District health officials recently pressured its for-profit parent corporation to pay $2 million a month to remedy severe staffing, equipment and supply shortages. It remains far from a full-service hospital, however. And if the money stopped tomorrow, the turnaround would, too.

Losing both facilities -- and diverting thousands of patients -- would be devastating, it is feared. In an increasingly regional health system, the repercussions could overload many hospitals.

"I've called it heading for a perfect storm," said Sharon Baskerville, executive director of the D.C. Primary Care Association and a former member of Greater Southeast's board. "I don't think either government is going to let that happen, but my concern is that millions and millions of dollars could get thrown at it without a long-term solution."

The Washington area's changing composition, especially the growing number of low-income residents, has squeezed hospitals in every jurisdiction.

The 110-bed Greater Southeast and 290-bed Prince George's Hospital Center have been buffeted by forces internal and external. Despite differences in ownership and size, their similarities stand out.

They are less than eight miles apart, once-respected bastions that attracted top doctors and nurses. But as the demographics and economics of their communities shifted, they began to lose privately insured patients. Those departures turned into an exodus.

Both then faced the same worsening challenges: mounting debt and inadequate capital, aging infrastructure and obsolete equipment. (At Prince George's Hospital, the boiler is patched with duct tape. At Greater Southeast, some machines are so old that repair parts are no longer manufactured.) With fewer paying patients, neither could upgrade to match competitors in the District or affluent suburban communities. They couldn't add lucrative services in such areas as orthopedics and cardiology.

National factors exacerbated local pressures: The federal government cut Medicare and Medicaid reimbursement rates. A nursing shortage forced administrators across the country to pay premium wages to attract enough staff members.

By the late 1990s, each facility was in dire fiscal straits. Dimensions had been managing the Prince George's hospital since 1983, and in 1999, a consultant recommended that it pursue a merger with a deep-pocketed organization. Greater Southeast declared bankruptcy and came hours away from a judge ordering its liquidation.

A look back suggests that that year marked the turning point for both hospitals. Neither ever recovered financial stability. And when D.C. General folded, Greater Southeast and Prince George's Hospital were harder pressed than their counterparts to absorb the indigent and uninsured patients who arrived at their doors.

Both became further embedded in the public's mind as the refuge of last resort, the safety net for the most marginalized.

"They were never able to rebrand themselves," Larry Gage, president of the National Association of Public Hospitals and Health Systems, said of Prince George's Hospital Center.

The same held true for Greater Southeast, which was further damaged by a second bankruptcy and such serious concerns about patient care that in 2003 it temporarily lost national accreditation and nearly lost its city license. Both setbacks occurred under Doctors Community Healthcare, now called Envision Hospital Corp., the firm that had bought the hospital out of its initial bankruptcy.

Neither Envision nor Dimensions has many friends left in town, a consequence of the recurring downward cycles that have led to heated exchanges between company executives and elected leaders. The two sides share little common ground. The corporations insist that government does not understand the full cost of delivering care to a sizeable indigent population; Envision Chairman Paul Tuft has said no other company has spent, or lost, as much investing in distressed urban hospitals.

Area officials said they have contributed mightily to help the hospitals succeed.

Dimensions Chief Executive G.T. Dunlop Ecker contends that the state system has fallen behind. An institution is reimbursed for direct expenses but not for physicians' fees. Dimensions spends nearly $12 million a year to keep crucial hospital units staffed with doctors 24 hours a day. Without that drain, it could almost break even.

In 2005, a special county-state committee concluded that Prince George's Hospital Center and the other county facilities had "suffered from a long period of poor management" under Dimensions, losing cash through inefficient hospital staffing, a bloated and ineffective leadership team and expensive consultants whose recommendations for improvement were rarely followed. The panel urged the county to sever its tie and set up a new source of government revenue to support hospital operations.

There has been no action on either front. And twice since March, Dimensions has claimed it was weeks away from running out of money.

Depending on the outcome of the court hearing this week -- Ecker and the board are trying to force another rescue with county dollars, on top of $50 million since 2003 -- the board could vote for bankruptcy or total shutdown. County Executive Jack B. Johnson (D), who has a long history of political fighting over the hospital, blames mismanagement for the system's latest losses.

For each hospital, the future remains uncertain. Both have been up for sale but attracted few suitors. Fifty percent of their patient base continues to be uninsured or dependent on Medicaid or another publicly subsidized program for health coverage.

"It's a hard sell because of community perceptions, physician perceptions," explained Bruce Siegel, a health-care policy expert and professor at George Washington University's school of public health. He sees a change in ownership as vital for both, as well as tough management decisions and an infusion of money. Even then, nothing is guaranteed.

Rebuilding a hospital can take years, Siegel said. Most of the time, "the strong get stronger, the weak get weaker."

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